If you’re toying with the idea of selling on Amazon, but are on a tight budget, you might be wondering how much money do you need to start selling on Amazon FBA?.
The answer is variable as it depends on the product you choose, the supplier you work with, how you ship your products, and how much you have to spend on marketing and promo costs.
However, this article uses my own personal experience from starting and growing a 7 figure Amazon business. I’ll try to break it down for you so you can start to estimate how much money you actually need to get your Amazon FBA business off the ground.
Quick Takeaways:
- Variable Costs: The amount of money you need to start selling on Amazon FBA varies depending on factors like your chosen product, supplier, shipping method, and marketing expenses.
- Amazon Account Types: When setting up your Amazon seller account, you have two options: an individual account for low-volume sellers (charged $0.99 per sale) or a professional account ($39.99 monthly fee) for those planning to sell in higher quantities.
- Product Research: To find profitable products, consider using tools like Jungle Scout, which offer valuable data and insights into sales, pricing, and competition. Jungle Scout can significantly expedite this process.
- Initial Inventory Costs: The upfront expenses include purchasing your initial inventory, which can range from a few hundred to thousands of dollars, depending on the type of products you choose to sell.
- Branding Materials: Creating logos and graphics can be cost-effective with tools like Canva or by outsourcing through services like Fiverr. High-quality product images are vital for attracting customers.
- Shipping and Customs Costs: Accurately estimate shipping expenses when starting out. Typically, smaller orders can be sent by air. Allocate about $1 per unit for shipping and duties, but consult your supplier for more precise rates.
- Marketing Budget: Regardless of your budget, set aside funds for marketing and promotion. The amount spent will vary, but it’s crucial to invest in building an online presence and content marketing.
- Additional Tips: Keep startup costs low by considering factors such as minimum order quantities, choosing domestic manufacturers, negotiating with suppliers, and taking advantage of Amazon’s promotions and discounts.
How Much Does it Cost to Start Selling on Amazon?
When setting up a seller’s account on Amazon, you have the choice between two different types; an individual account or a professional account.
The individual account is for small sellers who don’t expect to make more than 40 sales a month. You’re charged $0.99 per sale as opposed to a monthly subscription fee.
The professional account has a monthly subscription fee of $39.99, plus additional seller fees applicable when listing items and making sales (as with the individual seller plan), which we’ll discuss later in the article.
If you’re starting an FBA business with the intention of selling thousands of units, the professional account is the obvious choice.
However, don’t set it up and start to pay the fees until you’ve done your product research, found your supplier, and placed an order. This will save you money until you’re actually ready to open a seller account.
Potential Upfront Costs;
- Amazon professional account – $39.99
Product Research Costs
When starting your FBA business, and calculating how much money do you need to start selling on Amazon FBA, it’s imperative to find products to sell that are in high demand, has relatively low competition, and will yield a decent profit.
You can of course research products on Amazon manually, analyzing each search results page, best seller rank, review status, etc, however, this is an extremely laborious job, involving hours of research and lots of spreadsheets. (Great if that’s your jam!)
Instead, I highly recommend using software that significantly speeds up this process for you and analyzes hundreds of products at a time.
Jungle Scout is a powerful tool that provides you with a huge amount of data about each product, including monthly sales, pricing, key search metrics, reviews, and more. Their chrome extension gives an opportunity score allowing you to make the best guess about which product will be the most profitable pick from a specific segment.
Their suite of tools includes a sales estimator, product tracker, opportunity finder, and more helping you to seek out the best-performing products with the lowest amount of competition.
Signing up with Junglescout also means you get access to the academy which includes over 150 hours of Amazon FBA training and invites to their weekly webinars and live Q&A sessions.
Although this is an expense out of the gate, you can get started for just $29/month (billed annually) or $49 (billed monthly) and it’s well worth your investment if you’re serious about making a lot of money on Amazon!
Learn How to Build Your Own 7-Figure Amazon FBA Business
Part of the Junglescout suite of excellent FBA tools, the learning academy is a comprehensive video training library containing hours of content, including training videos, webinars, and interviews with successful Amazon sellers.
Whether you’re just starting your business, or growing your brand, get expert training from Amazon sellers without the hefty price tag.
Potential Upfront Costs;
- Amazon professional account – $39.99
- Jungle Scout account billed monthly – $49.00
Product Order Costs
Ordering your first shipment of products is likely to be one of your biggest expenses when starting out with Amazon FBA.
Depending on what type of items you’re selling, it could cost a few hundred to well over a few thousand dollars to get the necessary stock and other components in place.
When looking for your first products to sell, I recommend picking something small and light which should ensure it’s not too pricey to order in bulk. I got started with eyelash curlers, and my first order was around $1500 worth, which bought me 500 sets including branded packaging.
Unfortunately, my top dipping into the beauty world wasn’t to be and after a few months started a cooking brand and invested in what was to become our million-dollar product; a cooking thermometer.
Our initial order was around $1300 from memory, which again paid for 500 units. Shipping and listing promo was on top. So let’s discuss that next.
Potential Upfront Costs;
- Amazon professional account – $39.99
- Jungle Scout account billed monthly – $49.00
- Initial Inventory @ 500 units – $1500.00
Product Listing Promotional Costs, Photos & Logos
When creating your brand, you will need some branding materials, such as logos and graphics for packaging, etc.
If you don’t have a graphically creative bone in your body (like moi), you can get these done pretty cheaply using Fiverr. However, these days software such as Canva has logos and design templates built in.
All you have to do is select one you like, tweak colors or shapes and hey ho, you have a professional logo/graphic to use on your packaging and branding.
You can use Canva for free, but for a plethora of templates to make your life so much easier I recommend the professional account at $12.99/month (or $119.99/year).
You’ll also need some amazing photos of your products to use on your product listing. In fact, I would go so far as to say that your hero shot of your product (your main product image), is the most important part of your listing.
It’s what will grab the attention of someone scrolling products and make them look at yours. It, therefore, deserves some effort and attention.
If you’re on a very tight budget, these days your smartphone can take as good a picture as most expensive cameras, so if you’re confident in your photography skills, look at your competitor’s images for inspiration and take your own product photos.
If you happen to have an extra $50-$100 you could invest however, a professional main shot of your product might increase your listing conversations enough to pay that amount back a hundred times over.
Another option is enlisting the help of a friend or family member who happens to be a great photographer. The most important thing is that you take your product photos seriously. These will be crucial to your conversions so make sure you do a professional job.
Potential Upfront Costs;
- Amazon professional account – $39.99
- Junglescout account billed monthly – $49.00
- Initial Inventory @ 500 units – $1500.00
- Canva Membership – $12.99
- Product Hero Shot – $50.00
Shipping & Customs Costs
When thinking about how much money do you need to start selling on Amazon FBA, if you’re on a tight budget and looking to start with little to no money then it’s important to factor in the correct estimated shipping and customs costs.
These costs are something that many new sellers don’t take into consideration when calculating the profitability of a product.
Make sure to use the Amazon Fee Calculator alongside the Junglescout calculator when researching products to input shipping costs, duties, and potential storage costs to calculate the true profitability of a product.
To calculate shipping costs you’ll need to decide whether you’re sending by air or by sea. The chances are when you start out with small 500-unit orders you’ll send them by air.
When we’re working out our costs we generally allow a ‘safe’ amount of $1 per unit to cover shipping and duties etc. It will likely be less, but as a rough estimate, it’s a start.
To get accurate costs, your best bet is to chat with the supplier you choose as you’ll get far cheaper shipping rates via your suppliers and their contacts than you will be going direct with shipping companies.
Potential Upfront Costs;
- Amazon professional account – $39.99
- Jungle Scout account billed monthly – $49.00
- Initial Inventory @ 500 units – $1500.00
- Canva Membership – $12.99
- Product Hero Shot – $50.00
- Shipping & Customs @ 500 units – $500.00
Marketing Costs
When considering how much money do you need to start selling on Amazon FBA, and depending on how much money you have to work with, the approach you take to marketing your products can vary significantly.
On a tight budget with little money, you may want to take a more DIY approach and focus on building an online presence and creating lots of content.
With a larger budget, you may choose to invest in online advertising such as PPC and remarketing.
No matter what approach you take, it’s essential you set aside funds for marketing and promotion.
Because marketing is so variable it’s impossible to put a number on it at this stage. The best ballpark I can give you is that as you start to make regular sales and your business grows try to keep your marketing spend to 10%-15% or less of your income.
You may want to allot some funds for your launch strategy, particularly for PPC ads in the early days, and perhaps an influencer budget to promote your product as soon as it’s launched. How much is down to your own budget.
Quick tip: As you grow your business, focus on building an email list. This way when you launch new products you have an immediate sales pipeline and customers willing to leave you a review.
Potential Upfront Costs;
- Amazon professional account – $39.99
- Jungle Scout account billed monthly – $49.00
- Initial Inventory @ 500 units – $1500.00
- Canva Membership – $12.99
- Product Hero Shot – $50.00
- Shipping & Customs @ 500 units – $500.00
- Estimated Marketing Launch Costs – $500.00
Total Potential Upfront Costs; $2651.98
Please note this is a ballpark figure and depends on the product you select, how much shipping actually is, your budget for marketing etc.
However, even though $2500 – $3000 to start your Amazon business may sound like a big investment when we started our first Amazon business way back when, our first 500 units generated over $7,000 in sales.
In less than 3 months we’d generated over $25,000 in sales and within a year over $1 million with profit margins around 20%.
I’d happily invest $3k for those kinds of returns.
Pros and Cons of Starting an Amazon FBA Business
Pros
- Scalability: Amazon FBA offers the opportunity to scale your business rapidly, from selling a few units to thousands, regardless of how much capital to start you have. This flexibility is especially advantageous for new FBA sellers looking to start their journey with a minimal budget.
- Fulfillment Services: Amazon handles storage, packaging, and shipping, making it a convenient choice for business owners without the need for warehousing space or shipping logistics. This means the minimum investment for Amazon warehousing is not a concern.
- Global Reach: Amazon allows you to reach customers worldwide, expanding your market beyond geographical boundaries, even if you’re starting as a new business owner with a minimal budget required.
- Prime Eligibility: FBA products are Prime-eligible, which can boost your products’ visibility and trust among customers. Starting with an individual seller account or upgrading to an Amazon Professional Sellers Account is a strategic move for those who wonder if they can start Amazon FBA with 500 dollars or less.
- Customer Trust: Amazon’s reputation for reliability and excellent customer service can benefit your selling account by association, instilling confidence in both new FBA sellers and established businesses.
- Access to Data: Tools like Jungle Scout provide valuable data for product research, helping you make informed decisions and optimize your business. This data-driven approach can be invaluable for those concerned about how much an Amazon account costs relative to their budget.
Cons
- Fees: Amazon charges various fees, including referral, storage, and fulfillment fees, which can impact your profit margins and affect how much money you need to manage your business efficiently.
- Competition: The Amazon marketplace is highly competitive, making it essential to stand out through branding and marketing efforts, regardless of how much money I need to allocate for these aspects.
- Limited Control: You have limited control over order fulfillment and customer interactions, as Amazon handles these aspects, which might concern new business owners who prefer more hands-on involvement.
- Marketplace Changes: Amazon frequently updates its policies and algorithms, impacting product rankings and visibility. Adapting to these changes may require additional cost money to maintain your position in the marketplace.
- Initial Investment: Starting an Amazon FBA business requires an initial investment in inventory, Amazon fees, and marketing, and the minimum order quantity may vary depending on your chosen products. This initial cost can be a barrier for some new FBA sellers, especially those with a minimal budget required.
- Product Research: While tools like Jungle Scout assist in product research, finding the right product with low competition can still be challenging, raising questions like “Can I start Amazon FBA with 500 dollars and succeed?”.
By considering these pros and cons, you can make an informed decision about starting an Amazon FBA business, taking into account your budget, the minimum investment for Amazon, and your overall business goals. It’s essential to weigh the benefits against the challenges and create a strategy that aligns with your unique situation as an Amazon FBA business owner or new business owner.
10 Tips to Keep Your Amazon FBA Startup Costs Low
- Ordering minimum order quantities (MOQ) of products is a great way to test the market without breaking the bank.
- Opening an Amazon Account only when you’re ready to place your first order with the supplier helps keep costs low and control cash flow.
- Comparing shipping rates between different carriers is essential for finding the best options that meet your budget and timeline needs.
- Creating your own Branding, Logo, and Labeling with Canva helps you establish a unique identity without paying for expensive graphics and logos.
- Finding domestic manufacturers rather than overseas can be more cost-efficient in the long run and help you build relationships with people closer to home.
- Asking colleagues or people you know to order your product and leave a review can be more cost-effective than using Amazon Vine or professional reviewers’ services.
- Negotiating with manufacturers is possible as long as it does not impact the quality of the item you want to order—it will also help keep costs low by minimizing expenses associated with making purchases from suppliers in bulk.
- Avoid trademarking or opening a business account until after you’ve started to make decent sales. Instead, opt to sell in your own name initially which requires less capital upfront and lower overhead costs overall.
- Hybrid models are ideal for selling on both Amazon and other channels like eBay and Etsy because they allow maximum reach while still keeping effort (and associated costs) minimal over time while maximizing sales potential in the long run.
- Keeping up with Amazon’s latest promotions ensures that you make use of any discounts, rebates, or tax incentives available at all times which helps reduce overall costs significantly over time.
How Much Money Do You Need to Start Selling on Amazon FBA? – Summary
As you can see, Amazon FBA startup costs can range quite widely depending on product costs, shipping costs, and marketing, and the more you can invest in the early days, the faster you will grow.
However, it’s also possible to start on a shoestring budget if you have the work ethic to beg, borrow, and steal your way to reviews, eyeballs, and consistent sales.
Amazon has become more competitive over the years and the secret to success in 2023 and beyond is to build a real brand around your products, create a consistent and valuable content strategy, and build a community and email list.
My personal recommendation is to invest in Junglescout early doors as not only do they provide the software to make your job infinitely easier, but they also have all the training you need to get your Amazon business off the ground.
I hope this article has answered your question of ‘how much money do you need to start selling on Amazon FBA’ .
Good luck with your business!
How Much Money Do You Need to Start Selling on Amazon – FAQs
How Much Money Can I Make Selling on Amazon
Every selling situation is different, so the answer to how much money you can make selling on Amazon FBA is all based on what your strategy is.
The more capital you allocate at the beginning, the more likely you are to make sales more quickly. That said, finding the right products and niches as well as getting your listing optimized and visible takes consistency and effort – two elements to success that don’t necessarily require additional capital.
If you plan on starting an Amazon FBA business on a tight budget, with little to no money, then it may take longer to get sales and hit those bigger goals. You’ll need to work with what you have and find the best way to make the most of it. Additionally, you’ll have to research cheaper products to invest in and source suppliers that offer low minimum orders.
However, if you’re prepared to put the work in, grow a real brand and use influencers and content marketing to help you grow your business the sky’s the limit!
Do I Have to Pay to Sell on Amazon?
Yes, you’ll pay either $0.99 per product on an individual plan or $39.99/month on a professional plan.
How Much Money Does Amazon Take From Sellers?
Generally speaking, Amazon will take varying amounts of your profit depending on the type of products you sell and the fees associated with each.
When you sell on Amazon through FBA, you will end up paying fees such as order handling, pick & pack, and weight handling. Amazon also charges a referral fee of anywhere between 6 and 15% of your product’s price.
Other costs you may have to factor in as a seller are fulfillment fees, long-term storage fees, returns processing fees, and higher category fees for specific items.
See my Amazon fees article for a full breakdown of costs associated with selling on Amazon.
Are There Other Ways to Make Money on Amazon?
Yes! There are lots of different ways to make money on Amazon.
If you’re short on cash, you could start with retail or online arbitrage. You’ll still need to invest in some stock, but you can start much smaller and just test the waters with a few products reinvesting your profits to buy more.
See Jim Cockrum’s Proven Amazon Course for more details on making a lot of money with Amazon arbitrage.
If you love to write and fancy yourself an author you could self-publish on Amazon KDP. You can increase your income significantly by also narrating your book and selling it on Audible.
Other ways to make money on Amazon include selling low-content books, becoming an Amazon influencer, becoming an Amazon affiliate, Amazon Handmade, and more.
Learn How to Build Your Own 7-Figure Amazon FBA Business
Part of the Junglescout suite of excellent FBA tools, the learning academy is a comprehensive video training library containing hours of content, including training videos, webinars, and interviews with successful Amazon sellers.
Whether you’re just starting your business, or growing your brand, get expert training from Amazon sellers without the hefty price tag.
How much can a beginner make with Amazon FBA?
For beginners in Amazon FBA, the potential annual profit can range from $2,000 to $6,000. This estimation is based on the 52% of sellers who reported profit margins between 16% and 50%. If you maintain a healthy 30% profit margin for your Amazon FBA business and aim for a minimum of $1,000 in monthly sales, you could potentially earn around $3,600 per year.
Can I start Amazon FBA with $500?
Initiating an Amazon FBA business may appear to be a substantial investment of time and money, but in reality, the initial costs can be quite modest. Many new FBA sellers start their businesses with as little as $500 or less.
Is there a minimum for Amazon FBA?
When using FBA, there is no minimum amount of inventory required. You have the flexibility to send as little as one unit if you choose. However, it’s important to be aware of the maximum refill limits, so make sure to monitor and adhere to them.
Is selling FBA on Amazon worth it?
Selling on Amazon with FBA can be potentially profitable. Sellers typically experience an average increase in sales of 20-25% after using FBA.
